What is the deadline for a franchisee to pay termination damages to Brightstar Care after the effective date of termination?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
pass or compensation.
14.2 Termination Damages
If we terminate this Agreement before its scheduled expiration date due to any of your defaults (including your abandonment of the Agency), or if you terminate this Agreement without cause before its scheduled expiration date (which also will be considered your default under this
Agreement), you must pay us within fifteen (15) days after the effective date of this Agreement's termination, in addition to the other amounts specified in Section 14.1.3 above, termination damages equal to the greater of either (a) $150,000 or (b) the product of the Agency's Net Billings during the 12 months before the effective date of termination multiplied by three and that product then multiplied by 5.25%. However, if the effective date of termination is d
Source: Item 22 — CONTRACTS (FDD pages 117–118)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, if the franchise agreement is terminated early due to franchisee default or if the franchisee terminates without cause, the franchisee must pay termination damages to Brightstar Care within fifteen (15) days after the effective date of termination. This payment is in addition to any other amounts already owed to Brightstar Care as outlined in Section 14.1.3 of the agreement.
The termination damages are calculated as the greater of $150,000 or the product of the agency's net billings during the 12 months before termination, multiplied by three, and then multiplied by 5.25%. However, if the termination occurs during the last three years of the franchise term, the calculation changes. In this case, the termination damages will equal the product of the agency's net billings during the 12 months before termination, multiplied by x/12 (where "x" is the number of months remaining in the franchise term), and then multiplied by 5.25%.
Brightstar Care states that these termination damages are not a penalty but a reasonable, good-faith pre-estimate of the damages they will incur due to early termination, including loss of royalty payments, goodwill, market representation, consumer confusion, and expenses related to finding a new franchisee. The franchisee's payment covers only these Brand Damages resulting from early termination and does not cover any other damages Brightstar Care might be entitled to due to the franchisee's actions or inaction. This provision ensures that Brightstar Care is compensated for the financial impact of an early termination, while also outlining the specific calculation methods and acknowledging that other potential damages are not covered by this clause.